So one thing that really bugs a lot of photographers is when people compliment their camera as if the camera is what is making the pics so awesome. Well, you can't take a totally awesome camera and give it to a novice and get awesome pictures. But at the same time having good equipment is important and there are just some things you cannot do or do well with the cheaper stuff.
* I can only talk about canons because that is the only brand I am familiar with. A lot of photographers also like Nikons.
** These are just some recent snapshots I have taken of the kids.
I have a canon rebel xti. This is considered an entry level DSLR. I think now the entry level is the TS something or other. Don't get me wrong. This is a good camera and it should be for the almost 1000 bucks I paid for it 5 years ago but there are a lot of things that you can't do well with it. Here are some of the issues you might want to think about.
1. ISO - first of all I can only take my ISO up to 1600. And in reality I never like to go above 400 because I start to get terrible noise (grainy looking pictures). What this means is that in low light situations you are going to be limited without a flash.
2. Crop sensor - Don't ask me to explain this. But here is a link that explains the difference between full frame and crop sensor cameras.
If you have the lens that came with your DSLR it is most likely pretty awful. Professional photographers call lenses "glass." And one of the first things they will tell you is to go and get some "good glass." One of the reasons your kit lens probably sinks is because you can't go very wide with the aperture. You want to go wider so you can let in more light. The problem is that the really good glass is super expensive. But there is a pretty good lens you can get for canon DSLRs for a little under $100. Its a 50mm 1.8. Here is a link. This is the lens I have had for a while and it is great. So much better than the kit lens. This is what they call a prime lens, which means it doesn't zoom. You will have to move to get closer or further back. But don't worry it is worth it. You will get a lot better pictures.
So Why I am upgrading
I have decided that I really need to upgrade. I think I can get pretty good pics with what I have, if the situation is right. But a lot of time it's not ideal circumstances and that is why I am upgrading. I plan on getting the Canon 5d Mark III and a few new lenses. The canon 28mm 1.8 and the 50mm 1.4. With the new camera I can shoot in low light situations a lot easier and if I have to up my ISO I can go pretty high without getting noise. Also with the 28 mm lens I can get better pictures indoors because I won't need to be as far away from my subjects. Having the crop sensor and a 50mm lens makes me have to back up a lot and you can only go so far if you are inside.
So what should you do
So if you do have a kit lens I would recommend getting a new lens. The 50mm 1.8 is inexpensive and a great lens but you might still have problems with not being able to get as far back as you need to. So then you might want to consider the canon 28mm 1.8 (but it is about $400). I just ordered mine and it should be here any day. So I can't really say if it is great or not but from what I have read I will be happy. If you have any questions about this let me know. I am by no means an expert but I will try to help.